What Needs To Be Done Once You Close Your Home Loan?

Have you closed your home loan? If yes, what to do next? Usually, home buyers take a lot of precautions before availing a home loan. The home loan has to be closed in a proper way, as it is a long-term financial commitment. It can even be closed prematurely if you have the funds. The home loan must be closed, once the last EMI is paid.

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What Needs To Be Done Once You Close Your Home Loan?

If you’re planning to prematurely close the home loan, just follow the steps mentioned below:

1. Write a letter to the bank and request for a statement on the outstanding home loan amount as on the requisite date.
2. The bank computes the overall dues on the basis of the repayment cycle.
3. The bank must be given a time frame of 15-20 business days to assess the outstanding dues.
4. Make prepayments on or prior to the due date. The bank has to confirm the payments.
5. Collect the No Due Certificate from the bank and also the property related documents.
6. Ensure that the lien on your property has been removed.

See Also: Home Loan Interest Rates Rising

If you have paid the last home loan EMI, the following steps must be taken:

1. Collect the original property documents like indemnity paper, title deed, sales deed, power of attorney, possession letter, conveyance deed, receipts for payments and so on. If the bank fails to provide the property documents, you can file a complaint against them.
2. Ask your bank to close the home loan account. The bank has to keep the credit rating agencies informed on the home loan closure. The agencies may require about 30 business days to change the status of your home loan account.
3. Get a credit report after 30 days and cross-check if the personal and financial details are right. If the report contains any error, inform your bank and make sure to get them corrected.
4. If you have pledged any property against the home loan, after paying the final EMI, request your bank to release the lien on the property. The lien can be removed at the Sub-Registrar Office.
5. Collect the Encumbrance Certificate, which is issued at the Sub-Registrar Office. This certificate dictates the financial transactions made against the property.
6. Do not forget to collect the No Objection Certificate (NOC) and the Clearance Certificate (CC). The NOC is issued to certify there are no pending dues and the ownership has been transferred to you. It contains the loan account number, the beginning and end dates of the loan, the name of the customer, the property address and so on.

See Also: What Is My Home Loan Eligibility?

Consequences of Not Paying The Home Loan EMIs On Time

Buying a house is tough with the high prices. Availing home loans has become common, today. You can enjoy tax benefits under Section 80C of the Income Tax Act on the home loan principal repaid, up to Rs 1.5 Lakhs a year. Managing home loan repayments is a tedious task for many home loan borrowers. It may be because of financial indiscipline or health and job problems. You must understand that the bank does not foreclose the home loan if you miss 1 or 2 EMIs. The bank may seize the property when the EMIs are due for more than 3 months. If you do not reply to the legal notices sent by the bank, the bank retains the right to auction the property to recover the dues.

Visit the bank branch and give the reasons for not paying Home Loan EMIs on time. The bank offers a moratorium period if they are convinced, the reasons are genuine. If you are finding it difficult to pay Home Loan EMIs because of higher interest rates, try to get the loan restructured. Lenders restructure the home loan by lowering home loan EMIs and extending the tenure. If the bank is not ready to restructure the loan, then opt for home loan balance transfer with another bank.

See Also: Mortgage Loan Calculator

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